The company, under the helm of new chairman Fu Chengyu, who until April was offshore oil and gas producer CNOOC's chairman, is hopeful Beijing will reform the domestic fuel pricing system so that it will better reflect crude oil price movements.

'Losses due to state refined oil price control are transitory,' he said. 'In the long term, if we don't move toward market pricing, both our nation and companies will not be able to achieve sustainable development.'

Although Sinopec recorded 12.17 billion yuan (HK$14.8 billion) of first-half operating loss on refining, compared with a profit of 5.7 billion yuan in the corresponding period last year, Fu said having a substantial refining operation was key to Sinopec's gaining market share in fuel distribution and chemicals markets.

'Profit growth from fuel marketing and chemicals can offset the refining loss,' he said. 'And when fuel price control is eventually relaxed, huge value will be unleashed from our investments.'

Operating profit from oil and gas production rose 25.8 per cent to 34.65 billion yuan, on the back of a 34.2 per cent jump in average oil selling price and a 23.5 per cent rise in gas selling price. Oil and gas output was flat, affected by the overhaul of facilities at the offshore oil field in Angola.

Fuel distribution operating profit rose 35.6 per cent to 19.6 billion yuan, while chemicals production profit rose 96 per cent to 16.34 billion yuan. Fu expected the Brent benchmark crude oil price to hover between US$90 and US$110 a barrel in the second half, but added the global economy would probably remain flat.

The prospect of further monetary easing in the United States through government bond purchases could unleash further liquidity in the international market and prompt Beijing to keep money supply tight.

'That's why we have to prepare and shore up our cash pile while money is cheap,' he said, referring to the board's latest proposal to issue 20 billion yuan of corporate bonds and 30 billion yuan of bonds convertible to Sinopec shares.

Chief financial officer Wang Xinhua said there would be big funding needs in the next few years and wanted to lock up cheap funds early.

He said Sinopec had 10 refinery upgrade and revamp projects and might acquire its parent China Petrochemical's stakes in two mega-refineries to be built in the next few years with its Middle Eastern partners in Saudi Arabia and Guangdong.

Fu said the group planned to join others to invest 130 billion yuan to build a 7,373-kilometre pipeline to send gas made from coal from Xinjiang autonomous region to Guangdong and Zhejiang provinces, and would plough 80 billion yuan into a 4,600-kilometre pipeline from Xinjiang to Shandong and Jiangsu.